JUSTIFICATION OF DECISIONS ON VERTICAL INTEGRATION BASED ON A RESOURCE-GOAL-ORIENTED APPROACH

The article explores the features and peculiarities of vertical integration, and the problems that owners face when deciding on vertical integration. The object of the research is integration processes. The subject of the research is a possible model for analyzing the feasibility of decisions on the vertical integration of enterprises. By understanding the characteristics of current integrations, the study addresses the question of whether it is possible to assess the feasibility of incorporating an enterprise into a group of interrelated enterprises and to find a model for such an assessment. It is the analysis of the prospects of the enterprise and the group in which the new business structure is involved that will be the key to the positive effect of the integration or will show the negative prospects. Advantages and disadvantages inherent in vertical integration are investigated. The main advantage of vertical integration is ability to reduce the price of a final product due to lower prices on production of raw materials. The main disadvantage is the possible deterioration of the goods produced by integrated enterprise due to profit cut because of the sale of goods within a group of interconnected enterprises at reduced prices. The research considers the following components for the conclusion about the expediency of the integration: the choice of the optimal management decision, the assessment of the resources necessary for the integration and the levels of risks associated with the management decision. The study concludes that the problem of optimal management in merging is an assessment of the prospects for effective transfer of economic system from the current to the desired state after a period with an acceptable level of risks and with an available amount of material and management resources.

integration, group of interrelated enterprises, company integration, analysis of the feasibility of integration, resource-goal-oriented approach, concentration of production, concentration of capital, optimal management problem, economic system, management decision

Gritsenko Р. Р. Justification of decisions on vertical integration based on a resource-goal-oriented approach. Business. Education. Law, 2021, no. 4, pp. 97—102. (In Russ.) DOI: 10.25683/VOLBI.2021.57.426.